The Joint Committee on Taxation today released Estimates of Federal Tax Expenditures for Fiscal Years  2008-2012 (JCS-2-08), which implements its "new paradigm" of tax expenditure analysis:

Earlier this year, the JCT Staff introduced a new paradigm for the identification and classification of tax expenditures. The new paradigm is designed to improve the utility of tax expenditure analysis and to reemphasize its neutrality. In particular, the new paradigm addresses the principal criticism of tax expenditure analysis as originally conceived and, by implication, as previously implemented by the JCT Staff — its reliance on a comparison of present law with a hypothetical and subjectively determined “normal” tax system.

In this pamphlet, we implement the new paradigm in presenting the annual list of tax expenditures required by the Congressional Budget and Impoundment Control Act of 1974. Section I reviews our new approach, including its division of tax expenditures into two principal categories: tax expenditures that can be identified as exceptions to the general rules of the existing Internal Revenue Code (“Tax Subsidies”), and a new category that we have termed “Tax-Induced Structural Distortions.” Section I also describes three subcategories of Tax Subsidies designed to facilitate the comparison of similar tax expenditures to one another. Sections II and III illustrate the application of these categories and subcategories to particular tax expenditures. Section IV discusses the methodology used to quantify the magnitude of tax expenditures, and Section V presents a comprehensive list of tax expenditures, identified and categorized under our new approach.

Tax expenditure analysis is (or should be) simply an analytical tool, not a criticism of current law or an expression of a normatively superior alternative tax system. By describing provisions of current law as Tax Subsidies or Tax-Induced Structural Distortions, and by quantifying (in the former case) the forgone revenues associated with that tax expenditure, this pamphlet provides policymakers with an analytical framework and with quantitative data that they can employ in judging the merits of each such item. It should be emphasized that there is a reason behind every Tax-Subsidy or Tax-Induced Structural Distortion in the tax law, and that there are many other modes of analysis besides tax expenditure analysis that are relevant to the Members of Congress and others in weighing the value of each provision of the tax law. The inclusion in this pamphlet of an item as a tax expenditure therefore is not meant to convey that the provision in any fashion is necessarily problematic in the context of the larger policy issues that Congress considers in fashioning every piece of legislation.